Chapter V

FINANCIAL STUDY

This chapter discusses the financial aspects of the study. In order for a business plan to

understand it need money to start. To determine whether the future industry will remain

profitable through the existence of competitors and unfavorable economic condition, the

researches have to project a five-year Financial Statement.

This chapter includes the source of funds, balance sheet, income [statement, cost of goods

sold and cost of sales.

Financial Assumptions

1. Selling Price of Chili Fruit Ice cream are the following:

Chili Fruit Ice cream (Price list)

Variety

Chili Ube Ice cream 15.00

Chili Mango Ice cream 15.00

Chili Mallunggay Ice cream 20.00

Chili Avocado Ice cream 20.00

2. Sales demand increases 10% per year.

3. Raw Materials increases 5% per year.

4. Depreciation expense is computed in a straight line basis with an estimated useful life of

3 years.

5. 50% of net Income will be distributed after 3 years.

Initial Capital Requirements

The partners agreed to contribute an equal sharing of capital in amount of

25,000.00 each.

Initial capital Requirements

Partners Ratio Invested Amount

Gerylle Mhai D. Flores 33.33% 25000

Manny Balolong 33.33% 25000

Rey Hererria 33.33% 25000

TOTAL: 100% 75000

Cost and Expenses Schedule

Schedule 1:

Purchased of Raw Materials

Item Quantity per Production Unit Price Amount

Monthly Yearly

Cassava 1sack 12sacks 500.00 6,000.00

flour

White sugar 1sack 12 sacks 500.00 6000.00

Condense 100cans 1200cans 32.00 38,400.00

milk

Chili (siling 100pcs 1200pcs 4.00 4,800.00

labuyo)

Mallunggay 150 bunches 1800 bunches 5.00 9000.00

Mango 50kls 600kls 40.00 24,000.00

Ube 50kls 600kls 40.00 24,000.00

Total 1,121.00 112,200.00

Schedule 2: Rent Expense

Monthly Annual Cost

4,000.00 48,000.00

Schedule 3: Salaries and Wages

Position Cost per Month Cost per Annual

Cashier 2,000.00 24,000.00

Baker 4,000.00 48,000.00

Total 6000.00 72,000.00

Schedule 4: Office Supplies

Item Quantity Price Annual Cost

Record Book 2 80.00 160.00

Ball pen 10 10.00 100.00

Puncher 1 48.00 48.00

Stapler 1 40.00 40.00

Staple wire 2 12

Fastener 1 30.00 30.00

Bond paper 1 70.00 70.00

Stamp 1 95 875.00

Schedule 5: Packaging

Item Quantity Price Monthly Annual Cost

Paper Bag 10 30.00 300.00 3600.00

Box 10 50.00 500.00 6000.00

Total: 9600.00

Schedule 6: Transportation Cost

Item Cost per Month Annual Cost

Delivery Expense 5,000.00 60,000.00

Total: 60,000.00

Schedule 7: Promotional Expense

Cost No. of Months Annual Cost

Free Taste 1,500.00 introduction of 1,500.00

 the product

Flyers 2500.00 12 3,000.00

Total: 4,500.00

Schedule 8: Office Furniture’s and Fixtures

Item Quantity Price Amount Estimated Depreciation

useful life Expense

Table 1 1,500.00 1,500.00 3 500.00

Chair 2 300.00 600.00 3 200.00

Ceiling 1 750.00 750.00 3 250.00

Fan

Cabinets 1 1,000.00 1,000.00 3 333.33

Total: 3,850.00 1,283.33

Schedule 9: Equipment

Item Quantity Price Amount

Computer 1 35,000.00 35,000.00

Schedule 10: Depreciation Expense

Item Cost Estimated Depreciatio

useful life n
 2018 2019 2020

Office 3,850.00 (please see the 1,283.33 2,566.67 5,850.00

Furniture’s schedule 7)

and

Fixtures

Office 35,000.00 5 7,000.00 14,000.00 21,000.00

Equipment

Total: 8,283.33 16,566.67 24,850.00

Statement of Cost of Good Sold

2018 2019 2020

Beg. Inventory

Add:

Purchase of Raw Materials 267,120.00 280476.00 294499.8

Direct Labor 48,000.00 48,000.00 48,000.00

Overhead:

Packaging 9,600.00 9,600.00 9,600.00

Cost of Good Sold 324,720.00 338,076.00 352,099.8

Projected Demand and Sales for 2018-2020

Demand 2018 2019 2020

Chili Ube Ice 14,400.00 15,840.00 17,424.00

cream

Chili Mango Ice 14,400.00 15,840.00 17,424.00

cream

Chili Mallunggay 14,400.00 15,840.00 17,424.00

Ice cream

Chili Avocado Ice 14,400.00 15,840.00 17,424.00

cream

Total 57,600.00 63,360.00 69,696.00

Sales

Chili Ube Ice 216,000.00 237,600.00 261,360.00

cream

Chili Mango Ice 216,000.00 237,600.00 261,360.00

cream
Chili Mallunggay 288,000.00 316,800.00 348,480.00

Ice cream

Chili Avocado Ice 288,000.00 316,800.00 348,480.00

cream

Total 1,008,000.00 1,108,800.00 1,219,680.00

Product Quantity Price per Cost per Contribution Margin

Name Product Unit

2018 2019 2020

Chili Ube 40.00 15.00 11.17275 3.83 4.03 4.22

Ice cream

Chili 40.00 15.00 10.69775 4.30 4.52 4.74

Mango Ice

cream

Chili 40.00 20 10.39 9.67 10.15 10.66

Mallungga

y Ice cream

Chili 40.00 20 10.97275 9.03 9.48 9.95

Avocado

Ice cream

Total 26.83 28.17 29.58

 Projected Cost for the year 2018-2020

2018 2019 2020

267,120.00 280,476.00 294,499.8

Chili Fruit Ice Cream

Projected Income Statement

For the year ended Dec. 31, 2018 – Dec. 25, 2020

2018 2019 2020

Sales 1,008,000.00 1,108,800.00 1,219,680.00

Less: Cost of 324,720.00 338,076.00 352,099.8

Good Sold

Gross Income 683,280.00 770,724.00 867,580.2

Less: Operating

Expenses

Rent Expense 60,000.00 60,000.00 60,000.00

Salary 42,000.00 42,000.00 42,000.00

Office Supplies 1,242.00 1,242.00 1,242.00

Transportation 60,000.00 60,000.00 60,000.00

Expense

Promotional 4,500.00 4,500.00 4,500.00

Expense

Depreciation 8,283.33 8,283.33 8,283.33

Expense

Total 176,025.33 176,025.33 176,025.33

Operational

Expense

Income Before 507,254.67 594,698.67 691,554.87

Tax

Less: Income Tax 162,321.49 190,303.57 221,297.56

(32%)

Net Income 344,933.18 404,395.1 470,257.31

 Chili Fruit Ice Cream

Projected Statement of Cash Flow

For the year ended Dec. 31, 2018 – Dec. 25, 2020

2018 2019 2020

Cash Inflows

Cash, Beg 384,366.51 802,044.94

Partners Contribution 75,000.00

Sales 1,008,000.00 1,108,800.00 1,219,680.00

Total Cash Inflows 1,083,000.00 1,498,166.51 2,021,724.94

Less: Cash Outflows

Purchased of Fixed Assets 38,850.00

Purchased of Raw 267,120.00 280,476.00 294,499.8

Materials

Packaging 9,600.00 9,600.00 9,600.00

Direct Labor 48,000.00 48,000.00 48,000.00

Salary and Wages 42,000.00 42,000.00 42,000.00

Office Supplies 1,242.00 1,242.00 1,242.00

Rent 60,000.00 60,000.00 60,000.00

Transportation Expense 60,000.00 60,000.00 60,000.00

Promotional Expense 4,500.00 4,500.00 4,500.00

Income Tax 162,321.49 190303.57 221,297.56

TOTAL Operating 693,633.49 696,121.57 741,139.36

Expense

Cash Balance, End 389,366.51 802,044.94 1,280,585.58

Chili Fruit Ice Cream

Projected Balance Sheet

As of Dec. 31, 2018 – Dec. 25, 2020

2018 2019 2020

Assets

Current Assets

Cash 389,366.51 802,044.94 1,280,585.58

Total Current Assets 389,366.51 802,044.94 1,280,585.58

Non – Current Assets

Office 3,850.00 3,850.00 3,850.00

Furniture’s &
 Fixture

Office 35,000.00 35,000.00 35,000.00

Equipment

Total 38,850.00 38,850.00 38,850.00

Less: Accumulated 8,283.33 16,566.67 24,850.00

Depreciation

Total Non – Current 30,566.67 22,283.33 14,000.00

Assets

Total Assets 419,933.18 824,328.27 1,294,585.58

Liabilities &

Equity

Current Liabilities

Partners Equity

Partners 75,000 419,933.18 824,328.27

Contribution

Add: Net 344,933.18 404,395.1 470,257.31

Income

Total Liabilities & 419,933.18 824,328.27 1,294.585.58

Equity
 Financial Ratio

2018 2019 2020

Profit Margin 23,068.65.00 39,058.83

8,714.19.00

270,000.00 297,000.00 326,700.00

3% 8% 12%

Return on 23,068.65 39,058.83

investment 8,714.19

70,000.00 70,000.00 70,000.00

0.12 0.33 0.56

Return on Total 270,000 297,000 326,700

Asset 83,714.19 106,782.84 145,841.67

3.22 2.78 2.24

Return on 297,000.00 326,700

Equity 27,000.00

83,714.19 106,782.84 145,841.67

3.22 2.78 2.24

Fixed Asset 115,699.5 139,214.47

Turnover 94,590.00

14,599.99 10,299.98 5,999.97

6.48 11.23 23.20

Total Asset 115,699.5 139,214.47

Turnover 94,590.00

83,714.19 106,782.84 145,841.67

1.12 1.08 0.95

Breakeven Point 201,255.00 201,255.00 201,255.00

in Units 26.83 28.17 29.58

7.502 7.145 6.804